Key Takeaways
- Tesla shares jumped 6% after Barclays upgraded the stock to Overweight and raised its price target to $450 from $370, citing a possible merger with SpaceX.
- Barclays thinks a takeover premium will lift the stock and limit the downside, but that floor depends on a vote Tesla will have a hard time winning.
- A deal needs more than 50% of Tesla’s outstanding voting power, which would have meant roughly 68% of the votes cast at 2025’s turnout.
- Without a deal, Tesla’s forward P/E is far above its five-year average of 108x, so the first terms from the two companies’ special committees are the thing to watch.
Tesla (TSLA) stock jumped 6% today after Barclays analyst Dan Levy upgraded it to Overweight from Equal Weight before the open and raised his price target to $450 from $370.
His reason? A merger with SpaceX (SPCX), which he now calls “a key part of the Tesla bull case.”
Levy now treats a deal as effectively settled. Elon Musk said on SpaceX’s third-quarter call last Tuesday that there’s “a lot of merit to combining the companies,” and both boards have since formed special committees to explore it. As Levy put it in his note: “With a combination heavily expected, and with expectation for some premium to TSLA stock, we believe this should drive upside for the stock.”
He also argues that a deal limits the downside, because investors are likely to avoid shorting Tesla while one is pending.
The deal is doing all the heavy lifting here
Barclays’ new $450 target sits well above the $409 consensus, which peaked at $426 in July…
Levy does point to the core business too. He sees the car business growing again this year after two years of declines, and the energy business nearly sold out for 2027. But Tesla’s GAAP operating margin was a thin 2.6% in the third quarter, down from 5.8% a year earlier, as R&D spending jumped 69%.
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A floor that needs a vote
The catch: approval needs more than 50% of each company’s outstanding voting power, which Barclays itself calls a high hurdle. Musk controls SpaceX’s vote. Tesla’s is the hard part.
At 2025’s annual meeting turnout of about 74%, a merger would need roughly 68% of the votes cast. In 2025, Tesla’s proposal to drop its supermajority rules won 54% of the shares voted but just 39% of all shares.
And if the deal stalls, the stock has a long way to fall. Tesla traded at 175x forward earnings at Friday’s close, far above its five-year average of 108x…
…and it’s closer to 184x after today’s jump.
My take: Barclays is right that merger hopes are propping up Tesla stock. But a floor that depends on winning about two-thirds of the votes cast is a shaky thing to buy on.
Of course, no terms exist yet. The special committees’ first terms will show whether Tesla holders get a premium big enough to win that vote.
So what is Tesla stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
